. . .They're Borrowing Against Your Future!
It was bad enough when the New York State Legislature was secretly doling out cash for pet projects through unregulated -- and too often unaccounted for -- member item grants. Now we learn that the folks in Albany have not only been clandestinely converting your tax dollars into pork, but worse still, they've been borrowing money to fund projects, some of which bear little if any semblance of a benefit to the general public.
As Danny Hakim writes for The New York Times, our future has been mortgaged by our State Legislators -- lock, stock, and pork-barrel -- meaning the taxpayer will continue to pay, and pay, and pay, many times over, for monies (and interest) spent for the likes of paving driveways at a Long Island house of worship ($50,000), or fixing bathrooms at a local arts center and renovating a private theater in former Governor Pataki's hometown of Peekskill ($12.6 million).
In 2006, a record $1.9 billion was borrowed by the NYS Legislature, with the Governor's blessing. A banner year in adding to New York's burgeoning debt burden, estimated to cost us taxpayers a staggering $7 billion annually by 2010.
Hey, its your money (or it was, at one time). It is also money that will be coming out of the pockets of your children, grandchildren and great grandchildren, assuming any of them are left in New York. Isn't it time that we, the people, took more of an interest (let alone stewardship of the principal) of how and where our money is being spent?
- - -
New High in ’06 on Borrowing for Pet Projects
By DANNY HAKIM
ALBANY, Jan. 13 — For months, the state capital has been consumed by talk of state and federal investigations into the legislative pet projects known as member items.
But it turns out that those items, which cost about $200 million a year, are just the tip of the iceberg.
In 2006, an election year, Gov. George E. Pataki and the Legislature committed to borrowing $1.9 billion for an array of initiatives similar to member items, only costing nearly 10 times as much. Many of those grants went to politically connected companies and nonprofit organizations in lawmakers’ districts.
The little-noticed practice of using borrowed money to pay for what critics consider pork barrel projects began in the late 1990s, when the Legislature authorized debt to finance improvements to the Buffalo Bills’ football stadium, a move that was denounced by the state comptroller, H. Carl McCall, in part because it did not involve voter approval.
But the practice reached its apex last year, as Mr. Pataki was leaving office. The projects approved in the last nine months of 2006 exceeded the total amount of borrowed money disbursed over the previous eight years. According to a report published last year by a nonprofit group, the Center for Government Research, the previous borrowing totaled $1.7 billion.
Even before last year, New York had one of the highest levels of per capita debt in the nation. Budget watchdog groups assert that the recent borrowing for capital initiatives will sharply increase the state’s debt burden, projected to cost $7 billion annually by 2010. Some people also say it raises new questions about Mr. Pataki’s fiscal stewardship of the state.
The full details of the 2006 election-year borrowing spree became available only after Gov. Eliot Spitzer took office this month, because the Pataki administration had prevented the Empire State Development Corporation, the quasi-public authority that handles much of the state’s borrowing, from releasing a master list of its projects.
These projects differ from other types of state economic development aid because they are financed at the request of individual legislators or the governor, forgoing more rigorous and competitive application processes by state agencies.
Like member items, these capital projects are, for the most part, not listed in the state budget and therefore are generally not subject to legislative debate or public scrutiny. And as with member items, legislative leaders allocate the borrowed funds based on the seniority, loyalty or political vulnerability of a lawmaker.
But unlike member items, which are paid for out of the annual budget, the capital projects are financed with borrowed money that is repaid over many years.
The borrowed money went to all manner of projects, including construction costs, equipment purchasing and occasionally operating expenses.
A $2,521.83 grant was used to repave streets in Plattsburgh, for instance, and $50,000 went to build a new driveway for a Long Island church. Senator Joseph L. Bruno, the Republican majority leader, was co-sponsor of a $650 million grant to lure an Advanced Micro Devices semiconductor plant to his district. Another Republican, Senator William J. Larkin Jr., directed $75,000 toward the purchase of new lights at a Little League field in his Hudson Valley district.
Assembly Democrats used much of their money to offset education cuts or assist colleges, including by borrowing $26 million to help the State University of New York buy a supercomputer.
Over the last decade, lawmakers have used the money to finance a number of failed economic development projects, including a now-defunct high-speed ferry between Rochester and Canada that cost the state millions of dollars.
Among the projects on his voluminous list, Mr. Pataki directed $12.6 million to the small city of Peekskill — where he was once mayor — to fix bathrooms at a local arts center and to renovate a historic theater and a train station. He sent an additional $7.3 million to build new wings at Hudson Valley Hospital, where he had an emergency appendectomy last year.
Assistants to Mr. Pataki and Senate Republicans said the borrowing was used mostly for economic development projects that brought jobs to the state, and they asserted that there was adequate oversight.
“Whether it’s the A.M.D. fab in Malta, the Adirondack Museum in Tupper Lake or Cornell’s nanofabrication initiative in Ithaca, making smart capital investments in New York’s economic, intellectual and transportation infrastructure is essential to transforming New York’s economy,” said David Catalfamo, a spokesman for Mr. Pataki.
“Governor Pataki believes these investments are especially crucial to upstate communities as we continue to transition from a traditional industry-based economy to an economy based in knowledge and innovation,” Mr. Catalfamo said.
Governor Spitzer has said he will end the practice of borrowing for pet projects, a move legislative leaders say they support. Attorney General Andrew M. Cuomo has said he will investigate whether such projects fulfill a legitimate public purpose and has vowed to recover funds that he determines were misspent.
Mr. Spitzer and his staff also say they will take their first major borrowing proposal, a stem cell research fund, to the voters.
Doing so would “allow the public to make a choice as to whether this is a long-term investment worth making,” said Paul Francis, Mr. Spitzer’s budget director.
Mr. Francis also said that the governor would send a signal in his first budget address in the coming weeks “that we’re going to have a much more analytical process that evaluates the cost and benefits based on objective criteria.”
Budget experts on both sides of the political aisle criticized borrowing for pet projects.
“It’s one of the worst examples of a very flawed and very poor fiscal practice that we’re going to pay for in the long run,” Mr. McCall, a Democrat, said.
Edmund J. McMahon, executive director of the Empire Center for New York State Policy, an affiliate of the Manhattan Institute, a nonprofit conservative policy group, said last year was “the triple witching hour of pork.”
“They’ve been building up towards this; every pot of money they have surges in an election year and especially with a change in power,” he said.
Like many other conservatives who once supported Mr. Pataki, Mr. McMahon found fault with his fiscal policies.
“It was something that he enabled and enthusiastically participated in,” he said, adding, “I’m sure they’ll say the Legislature made them do it. Baloney!”
Untangling these projects is difficult. The Legislature and Mr. Pataki have created almost a dozen pots of borrowed money to finance their initiatives. And most of the projects are never delineated in the budget; the grant to A.M.D. for a manufacturing plant near Albany was one of the exceptions.
The money is allocated to two major authorities with politically appointed boards. The governor and the Republican-controlled Senate typically have channeled projects through the Empire State Development Corporation, while the Democratic-controlled Assembly has financed its projects out of the Dormitory Authority.
Many of the private companies that have received aid had political connections to lawmakers or the governor.
More than $200,000, for instance, was directed last year to the New York, Susquehanna and Western Rail Corporation. (The rail line has received millions more in similar state aid over the years.) The railroad is headed by a prominent donor to Mr. Pataki and other Republicans, Walter Rich, who is being investigated by the state Lobbying Commission over his fund-raising activities.
The commission recently rejected an attempt by the company to be co-hosts to scores of legislators and their spouses on a private rail trip from Saratoga Springs, N.Y., to Canada.
“Rehabilitating rail tracks in the Adirondacks will help draw visitors and boost economic opportunities throughout the region,” Mr. Pataki said in one of his last public statements, which announced millions of dollars of new grants to Mr. Rich’s company and other rail lines.
Lawmakers from both parties also directed nearly $1 million to SuperPower Inc. of Schenectady, a maker of superconducting cables. Political action committees connected to SuperPower had contributed to Mr. Pataki, Mr. Spitzer, Mr. Bruno and Assembly Speaker Sheldon Silver.
Mr. Bruno also directed $195,000 to Autotask and another $195,000 to e.nfrastructure (now called nfrastructure), two small companies in his district. Officials with the two technology firms said they had requested aid from Mr. Bruno to help their expanding operations stay in the capital region.
Federal authorities have been investigating Mr. Bruno’s outside consulting business for several months and have issued subpoenas to at least one business that received member item money from him. Executives at Autotask and nfrastructure said they had not received subpoenas in that investigation and had never been clients of Mr. Bruno’s consulting firm.
Dan Moran, vice president of human resources at nfrastructure, said that the application process for the state money was “extensive,” adding, “we had to show every single penny we spent.” He said that Mr. Bruno’s staff played an important role in helping his company win the grant.
Richard Frederick, the president of Autotask, said he had recently been told his grant was “on hold,” though it was approved last month.
Jessica Copen, a spokeswoman for the Empire State Development Corporation, said that “some of these grants require public hearings, so that’s why some have been held up, and the new administration just received signature power yesterday, and that means they can actually sign the grant disbursement agreements.”
John McArdle, a spokesman for Mr. Bruno, said that, like Mr. Spitzer, the Senate Republicans supported putting all future spending on initiatives, whether member items or capital projects, in the state budget.
But he defended the spending. “The projects that we fund are principally geared to create jobs and attract business and employers to the state,” he said.
Copyright 2007 The New York Times Company